9911796707
TMI Blog2010 (1) TMI 1112X X X X Extracts X X X X X X X X Extracts X X X X ..... of 2009 - - - Dated:- 13-1-2010 - RAMACHANDRAN NAIR C.N. AND MOHANAN V.K. , JJ. The judgment of the court was delivered by C. N. RAMACHANDRAN NAIR J. The question raised in the revision case filed by the State is whether the Sales Tax Appellate Tribunal was justified in holding that the respondent-assessee, namely, Nilkamal Ltd., formerly known as Nilkamal Plastics Ltd., which got plastic moulded chairs manufactured from an SSI unit in Kerala under agreement, purchased and sold the same in the brand name Nilkamal , is not liable to pay sales tax as brand name holder under section 5(2) of the Kerala General Sales Tax Act, 1963 (hereinafter called the Act ). The W.P. (C)s. are filed by the assessee challenging their subsequent assessments as brand name holders under section 5(2) of the Act. We have heard Government Pleader appearing for the State which filed the revision case and advocates Sri K. Srikumar and Sri R. Muralidharan appearing for the assessee. The Government Pleader relied on our recent judgment in S.T. Rev. No. 445 of 2006 and connected cases in the case of State of Kerala v. Oxford Mouldings (P) Ltd., wherein we have reversed order of the very same Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany. Clause 2 mandates that the entire production of moulded furniture by the manufacturer will be procured/purchased by the assessee-company. Clause 5 is a guideline for the purpose of fixation of price by the manufacturer on the sale of the entire production to the assessee-company. Clause 7 states that the raw materials, packing materials, etc., for production for the assessee should be procured based on assessee's specifications. The last but most important clause is the restriction on the manufacturer to fix the price of the product depending on market conditions in as much as the assessee has reserved to itself benefit in the fluctuation in raw material price. In other words, if raw material's price goes down, the price reduction will go to the advantage of the assessee. Besides the terms of the agreement, Government Pleader has produced the website of the assessee-company which shows that the Nilkamal group mainly is engaged in production and sale of plastic moulded chairs under the brand name Nilkamal . The concern is a family concern with five members whose names and addresses and the companies and concerns under their control are also given in the website. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of sub-section (2) of section 5 of the Act, the assessee being a brand name holder is the first seller in the State liable to pay tax. Sub-section (2A) of section 5 provides for a mechanism by which the first seller, if he is not a brand name holder of the goods, is entitled to claim exemption from tax by obtaining a declaration from the purchaser that the purchaser is the brand name holder of the goods liable to pay tax on first sale. However, in this case the manufacturer has not produced any declaration from the purchaser because being an SSI unit, they are otherwise entitled to exemption on the sale of products. The assessee has no case that they are not the brand name holders of the product and their only case is that the original brand name holders, namely, the partnership firm Nilkamal Crates and Containers, granted the assessee licence to use the brand name without payment of royalty. In our view, it makes no difference whether assessee is the owner or only a grantee of licence from the original owner which is the sister concern of the assessee. So long as the assessee is entitled to manufacture or get the goods manufactured in the brand name Nilkamal and market it t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he brand name holder entitled to sell the goods in the brand name. In view of the above finding, the next question to be considered is whether the assessee is the brand name holder. The case of the assessee itself is that even though it is not the actual brand name owner and the brand name owner is the sister concern which is the firm named Nilkamal Crates and Containers, it is granted a licence to use the brand name by the original owner without payment of any royalty. Admittedly the assessee got the product manufactured by the manufacturer in the brand name Nilkamal, purchased the entire production and sold the same. When the marketing of the product is done by the assessee in the brand name Nilkamal, the assessee's sale, in our view, will be the deemed first sale by virtue of operation of section 5(2) of the Act. So much so, the assessee becomes the dealer liable to pay tax on the first sale of the goods, namely, plastic moulded chairs sold in the brand name Nilkamal. The Tribunal has relied on the licence agreement dated December 6, 2001 between the assessee's sister concern, namely, the partnership firm Nilkamal Crates and Containers and the manufacturing company by ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
